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Disclosing client instructions did not end confidentiality

Out-Law News | 29 Jan 2020 | 10:47 am | 3 min. read

A law firm which provided written confirmation to a financing bank that it had had received instructions from its client did not automatically bring legal advice privilege to an end, and so need not provide the bank with other documents relating to a dispute between the lender and the client, the Court of Appeal of England and Wales has ruled.

The law firm, Ashurst, was asked to provide Austrian bank Raiffeissen Bank International (RBI) with written confirmation that it had received funding from its client, PT Sinar Mas Multiartha TBK (SM Multiartha), along with irrevocable instructions to transfer those funds to an escrow account. The funding was supplied in connection with a disputed sale and purchase agreement, which did not ultimately proceed.

The Court of Appeal, in its judgment, said that any instructions provided by SM Multiartha to Ashurst formed part of the "continuum of communications in a relevant legal context, which were therefore privileged".

"[Ashurst's] role will no doubt have included negotiating and reviewing the terms of the documentation, including the Solicitor's Confirmation, and advising its client as to the meaning and effect of that Confirmation," said Lord Justice Males, giving the judgment of the court. "Such advice is likely to have included advising as to the significance of the statement that the instructions which it had received were 'irrevocable' and the circumstances, if any, in which the client would be entitled to the return of the money."

Fletcher Michael_November 2019

Michael Fletcher

Partner

Helpfully to businesses wishing to protect the confidentiality of their communications with their legal advisors, this decision confirms that the so-called 'continuum of communications' to which legal advice privilege may apply is broad.

"This is almost inevitably the context in which Ashurst will have received its instructions as to the basis on which the money should be held in its client account and the Confirmation should be provided. It is by its nature a legal context directly related to the performance by Ashurst of its professional duties as the client's solicitor. It would be wrong in my judgment to seek to isolate specific communications as constituting 'the instructions' for the purpose of disclosure without regard to that context, even assuming that it would be practicable to do so," he said.

Commercial litigation expert Michael Fletcher of Pinsent Masons, the law firm behind Out-Law, said: "Helpfully to businesses wishing to protect the confidentiality of their communications with their legal advisors, this decision confirms that the so-called 'continuum of communications' to which legal advice privilege may apply is broad".

"Even where a particular piece of correspondence may not contain instructions to advise or legal advice itself, it will generally be privileged if the contents form part of the 'continuum', or series, of communications between lawyer and client whose dominant purpose is that legal advice can be sought or given when appropriate," he said.

"However, businesses must still take care. A common misconception is that copying a lawyer – perhaps from in-house legal – into a communication is enough to attract privilege. It is not: the purpose of the communication must be obtaining legal advice. The advice in question must also be of a legal nature – purely commercial discussions are not privileged," he said.

To be protected by legal advice privilege, documents must not only be for the dominant purpose of the provision of legal advice but must also be confidential. A document which is privileged need not generally be shared with counterparties to litigation or others, including regulators and enforcement agencies.

In this case, the Court of Appeal ruled that simply providing confirmation of a transfer of funds to RBI "does not automatically and without more give rise to a loss of confidentiality in the documents which contain or evidence those instructions".

"It is by no means uncommon for solicitors to make such statements and it would be surprising if, by their doing so, privilege in their underlying instructions was lost," said Lord Justice Males.

"What [RBI] appears to want is more detail of the communications between SM Multiartha and Ashurst, going beyond what is apparent from the Confirmation itself, and which will provide it with information which it does not already have. But I can see no reason why such matters should cease to be confidential as between solicitor and client merely because the client authorised Ashurst to make the statements contained in the Confirmation," he said.

Charlotte Evenden

Solicitor

Although the court in this case did not find that privilege and confidentiality had been waived in this way, decisions in this area are highly fact-sensitive so legal advice on the risks of any waiver should always be sought.

The Court of Appeal also noted that Ashurst, in giving the confirmation, had been "undertaking an independent obligation" to RBI, so that there was "no question of the client authorising Ashurst to say any more about the instructions which it had received or the communications between Ashurst and its client".

Ashurst did not resist providing the documents on the basis that they were not relevant. However, the court did say that none of the documents sought by RBI were relevant to its underlying dispute with Ashurst, which centred only on what contractual obligations, if any, Ashurst had towards the bank.

Commercial litigation expert Charlotte Evenden said: "Parties are free to waive privilege in a particular communication, for example by asking their lawyers to convey something to the other side which would otherwise be privileged. They may do this if, for example, the privileged material supports their position in litigation".

"However, this must always be done with great care, to avoid a court finding that privilege has also been waived over other privileged communications of that party relevant to the same 'transaction' or 'issue'. Although the court in this case did not find that privilege and confidentiality had been waived in this way, decisions in this area are highly fact-sensitive so legal advice on the risks of any waiver should always be sought," she said.